[JURIST] A commission of the French Court of Cassation [official website, in French] on Thursday ordered an investigation into the newly appointed Managing Director of the International Monetary Fund (IMF) [official website], Christine Lagarde, for her involvement in a $400 million arbitration agreement with French businessman Bernard Tapie. Tapie won a settlement with state-owned bank Credit Lyonnais [official website, in French] in 2008 when Lagarde was acting as France’s Finance Minister. A senior prosecutor contends that Lagarde “overstepped her authority” in allowing the arbitration to proceed [Le Monde report, in French] because the controversy involved a state-owned institution. Furthermore, an investigation would be needed to determine whether Lagarde sufficiently probed the neutrality of one of the arbitration judges. The investigation will be ongoing for several months, after which a decision will be made about whether to send the case to trial.

Lagarde is not the only French official to be subjected to investigations. The Court of Cassation ruled [JURIST report] in May that the corruption trial against former French president Jacques Chirac [BBC profile; JURIST news archive] could continue. Chirac is being tried for allegedly misusing funds during his time as Paris mayor in 1990. The trial began despite the fact that the main plaintiff dropped out of the suit. Last September, the Paris city council accepted a settlement deal [JURIST report] in which the former president agreed to pay USD $741,000 in compensation for the money paid out for false jobs. In exchange, the city agreed to drop out of the corruption suit. Chirac stated that the settlement was not an admission of guilt. A French judge placed Chirac under preliminary investigation [JURIST report] in December 2009. Chirac’s trial on corruption charges marks the first time [JURIST comment] a former president will have to answer to charges against him in a court of law. The trial is a combination of two separate corruption-related cases, in which Chirac allegedly financed the Rally for the Republic (RPR), now renamed as the Union for a Popular Movement [party website, in French], by illegally establishing fake city positions between 1977 and 1995 for party members to collect salaries totaling several million dollars.